Correspondence
A Letter from Moscow [To the Editor of the SPECTATOR.]
Stn,—Unlike the rest of the world the Soviet Union looks forward to 1932 with undiminished optimism, one might say with extravagant hopes, if the Moscow newspapers are any criterion. The session of the Central Executive Committee and Council of Nationalities (sitting jointly in what corre- sponds to Parliament) which has just ended, ratified a highly ambitiousprogramme for the coming year. The budget for 1932 calls for, an expenditure of more than 20,000,000,000 roubles as new capital investment in State industry and agriculture. It is planned to increase industrial production by thirty-six per cent., as compared with an estimated increase for the year just concluded of forty-five per cent, and a real increase of . twenty-one per cent. The latter figure shows that 1931 has not been so successful as some of the Soviet press panegyrists would have their readers believe.
The production of coal and coke fell behind expectations, while pig iron and steel barely reached half the quota projected. Little less serious were the shortcomings in transport, which fell in the early months of the year to a daily average of freight-car loadings of 25,000, against a programme figure of 60,000, and even now rarely surpasses 50,000 on a programme of 66,000. The fact is the U.S.S.R. has been far froM unscathed by the world depression. Materials ordered abroad, for instance structural steel and rails from the factories of Polish Silesia, were not delivered owing to financial difficulties, and the sharp falls in price of raw materials and commodities, which form the greater part of Soviet export, had an unfavorable effect upon the year's programme for foreign trade, which ends with a passive balance of approximately 25,000,000 pounds gold.
The programme for 1932 takes this factor into account. Im- ports, both of materials and " technical aid," will be reduced fully forty per cent. unless new sources of long-term credit are forthcoming. The Soviet Press makes light of this decrease and declares proudly that this country is now in a position to produce for itself what it formerly had to buy from foreigners, which indeed is partly true. At the same time it must be re- membered that much of the passive trade balance was the result of large new credits from Germany which do not fall due until the latter part of this year or 1933. In view of this the reduc- tion of imports is a sane and conservative step, and in my opinion there is no reason to anticipate any failure of the U.S.S.R. to meet its obligations punctually.
Of course any improvement in world market prices would stimulate Soviet export correspondingly. This is evident front the wheat figures for November and December, which showed a sharp increase over October as a result of the short-lived rise in prices. Far from being deficient in wheat, as was reported abroad in October, the U.S.S.R. "State collections" for 1931 were superior in quantity on December 15th to the same date in the previous year. From the harvest of 1930 a total of 221 million tons of cereals were " collected," that is mobilized by the State, whereas the figure on December 15th last was already 23.2 millions, With approximately 21 million tons more to come.
Not that a decrease. in exports, especially of food stuffs, would be wholly detrimental to Soviet Russia where the standard of living is still deplorably low, although there has been marked improvement in the last six months. Gains in this respect` are partly due to better distribution, but it does also seem that supplies available for the urban industrial popu- lation are greater than a year ago, and speakers at the recent session of Parliament laid considerable emphasis on further improvements planned for the coming year. The deficit in. the trade balance will be met by the export of gold, whose production is now fully equal to, if not higher than, pre-War levels and by foreign valeta, the supply of which in the hands of the State is being increased by a novel expedient.
Throughout Russia there has been established a chain of department stores selling " deficient " (that is goods which are " short 7' or " lacking '? in co-operative and other stores) food- stuffs and other goods for foreign money or gold objects and coins. -According to the latest estimate this device, combined with a system by which persons abroad with friends or rela- tives in the Soviet Union can buy and send them " delivery
orders " on these " Torgsin " (as they are called) department stores. is bringing into State coffers not less than a million dollars per week, which forms an important contribution to the payment of foreign obligations.
The Torgsin scheme, which is really " home export," renders this arrangement henceforth unnecessary but it will be allowed to continue until the expiration of the year's contract in July. These measures, and the improvement of distribution to workers through their own " Closed distributing centres " in factories and other State enterprises, have noticeably raised living standards of the urban population. There has been too a marked advance in the housing and paving of the cities. In the latter field it is claimed that more new pavement. has been laid in Moscow in the past year than in the preceding thirty, which the appearance of the city justifies. In housing, however, it is still doubtful whether the great and genuine progress made keeps pace with the increase of population. which I am inclined to estimate by birth and influx from the provinces as not far short of fifty thousand per month. There are, nevertheless, signs that organized town planning is bearing fruit in Moscow and a good beginning has been made with an ambitious scheme for the supply in " mains " of hot water for heating purposes.
In home affairs the outstanding event of the year was Stalin's speech at the beginning of July, which did much to redress the social status and material conditions of the technical intelligentsia both " old " and " new," and to remove " ultra-communist " equalization of pay between skilled workmen and their less competent brethren, which had led in many cases to a deterioration in the work performed and to a loss of interest in the more qualified ranks. Stalin made it clear that the time had not yet come to abandon such stimulus to individual initiative, and strongly reaffirmed one of the principles of Lenin's Nep, namely, greater reward for greater service.
In the foreign field Soviet attention has been chiefly occupied by the financial difficulties of Germany, the abandonment of the gold standard by Britain, the Japanese adventure in Manchuria, and negotiations for pacts of non-aggression with France and Poland. Germany's difficulties had both a positive and negative effect on this country. On one band, German efforts to fad new markets of sale led to a large increase of credit to the U.S.S.R., on the other, some of the business involved, not to mention the contracts with Polish Silesia I referred to above, which were largely financed by German capital, were hampered to no small degree by German financial weakness or by impossibly high discount rates which resulted therefrom. Britain's abandonment of the gold standard undoubtedly caused loss to this country which is understood to have had is considerable holding of sterling both at home and abroad. It also raised fears lest there might be a serious curtailment of Soviet exports to the United Kingdom, although in some quarters here it is hoped that the British desire to lister exports may lead to a balancing of trade between the two countries by a further extension of credits to the U.S.S.R.
The Japanese occupation of Manchuria gave Soviet statesmen sonic awkward moments but I am inclined to question whether there was any real fear here that Japan wished to provoke war with the Soviet. A puppet Chinese government in Manchuria under Japan's aegis might be less welcome to this country than the former independent State, but if the Japanese succeed in fully re-establishing law and order it is probable that Soviet interests, at any rate from an economic point of view, will lose little by the change. According to my information non- aggression negotiations with France made good progress in the summer, indeed I have reason to believe that an agree- ment in principle was " initialled " in August. Subsequently they lapsed, but the subject was revived by negotiations with Poland towards the end of the year, partly due to a French desire that her eastern ally should he included, and perhaps Roumania also, despite the " thorny point " of Bessarabia. At any rate the Poles receded in more than one particular from their previous stand and it now seems probable that agreement with them will be reached before long, which may logically be followed by the signature of pacts with France and sonic of the smaller states bordering the U.S.S.R.---! am,
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